Alpha | Meghmani Finechem Ltd. – Equity Research Desk

Meghmani Finechem Ltd. – Value Adding Products

Meghmani Finechem Ltd (MFL), part of the Ahmedabad-based Meghmani group, was incorporated in September 2007 as a subsidiary of Meghmani Organics Ltd (MOL), to establish a captive source of caustic soda and chlorine derivatives. Pursuant to NCLT approval for demerger, MFL was listed on the stock exchanges with the promoters currently holding 71% of the equity stake with the balance being held by the public.

MFL started operations in July 2009 with an installed capacity for manufacturing 119,000 tonnes per annum (TPA) of caustic soda. MFL is an ISO 9001 and ISO 14001 certified company founded in 2007 and well recognized in global markets as one of the leading producers of Chlor alkali and its derivatives.

Valuation

MFL revenue and operating performance will gradually improve on the back of being a leading manufacturer of Chlor-alkali business, new product capacities, and diversifying its business more towards value-added products. Further its stable financial performance, robust demand, capacity expansion, and timely project completion provide visibility for the long term. We recommend a BUY rating in the stock with the target price (TP) of Rs.1800, 20x FY24E EPS.